New supply of retail space expected to increase by 45% by 2028: Report


New supply of retail real estate space is expected to increase by 45% from the current 91 mn sq ft across seven major cities by 2028 as developers expand their retail footprint, a new report by JLL said on February 7.

New supply of retail real estate space is expected to increase by 45% from the current 91 mn sq ft across seven major cities by 2028 as developers expand their retail footprint (PTI)(PTI)
New supply of retail real estate space is expected to increase by 45% from the current 91 mn sq ft across seven major cities by 2028 as developers expand their retail footprint (PTI)(PTI)

The operational retail stock across the country currently stands at 91 million sq ft and is expected to increase by 45% and touch 132 million sq ft by the end of 2028, the report said. The top seven cities include Delhi-NCR, Mumbai, Pune, Bengaluru, Kolkata, Chennai, and Hyderabad.

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Stable economic conditions have fueled the consumption-led growth which has enabled footprint expansion by retailers and new mall announcements. Apart from the strong supply pipeline, mall developers are focusing on building larger-sized malls to offer better shopping experience.

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The retail market has a robust supply of around 41 million sq ft of developments scheduled to be operational between 2024 and 2028 across top 7 cities of India.

Retail stock supply constitutes projects which are either under construction or in active planning stages. Delhi NCR is projected to have the majority share (34%), followed by Chennai (20%), Bengaluru and Hyderabad each at 15%.

The average size of mall developments that were completed in 2023 has increased by 41% from 276,800 sqft in 2022 to 389,900 sqft. Developers are coming up with bigger malls, it said.

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Large foreign institutional investors continue to acquire/invest in retail assets via greenfield and brownfield development platforms. These investors currently hold around 24% (9.7 million sq ft) of the new supply which will get delivered over the next five years, the report said.

“Encouraged by the increased buoyancy of the Indian economy, leading real estate developers have made significant announcements to launch retail developments in the country. A substantial proportion of the upcoming supply is by institutional players. The operational stock of retail developments which stands at 91 million sq ft is expected to increase by 45% and reach 132 million sq ft by the end of 2028,” said Samantak Das, Chief Economist and Head Research & REIS, India, JLL.

With the launch of India’s first retail-led REIT in 2023, there may be more acquisitions to expand the retail portfolio further. As most global institutional funds have created retail development platforms with key developers, the retail segment is set to get on a faster growth trajectory, he said.

16 retail developments became operational in 2023

A total of 16 retail developments with a gross leasable area of 6.2 million sq ft became operational in 2023, up by 125% y-o-y. Notably, 44% (2.7 million sq ft) of the new supply that became operational in 2023 had the presence of institutional funds.

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“The average size of mall developments that were completed in 2023 has increased by 41% from 276,800 sqft in 2022 to 389,900 sqft. Developers are coming up with bigger malls to offer elevated experience to the shoppers, be it entertainment, F&B, or fashion,” said Rahul Arora, Head of Office Leasing Advisory and Retail Services, India, JLL.

Sustained new store openings and pre-commitments.

In 2023, 8.7 million sq ft of gross leasing across malls and prominent high streets was recorded in top 7 cities. Bengaluru led the gross leasing with a share of 33%, followed by Delhi NCR with a share of 18% and Mumbai with a share of 17%. Consumer confidence is getting translated into expansion by retailers to increase their store network and sales.

Gross leasing refers to all lease transactions recorded during the period, including confirmed pre-commitments.

Fashion and apparel had the highest share of 40% in the total leasing volume. Super value and value fashion segments have witnessed great traction from leading retailers as they are launching their new formats and expanding in this segment. Other categories that contributed majorly were F&B (16%), entertainment (13%), home and furnishing (6%) and daily needs and grocery (5%).

India remains on the radar of international brands’ expansion plans.

A total of 14 new international brands entered India in 2023, up from 11 and 8 brands in 2022 and 2021 respectively. Majority (8 brands) of the new entrants this year opened their first stores in Mumbai followed by Delhi NCR with F&B segment being the top ranker.



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